Société Générale to Cut Jobs Amid Europe's Investment Banking Downturn -- Update
10 April 2019 - 1:03AM
Dow Jones News
By Noemie Bisserbe and Ben Dummett
PARIS--French bank Société Générale SA said Tuesday it plans to
cut nearly 1,600 jobs globally after a slump in investment banking
revenue in the fourth quarter, retrenching to its core businesses
as choppy markets hobble Europe's banks.
The job cuts at Société Générale come as investment banks in
Europe endured a particularly tough first quarter with a slew of
economic and political challenges leaving companies reluctant to
pursue deals or raise money. Among factors hurting sentiment are
the European Commission's recent move to cut its economic growth
outlook, the prospect of slumping profits at big German car makers,
a recession in Italy, Britain's messy divorce talks with the EU and
the yellow-vest protest movement in France.
Overall investment banking revenue across the region generated
from deal making, lending, and equity and debt underwriting fell
33% to $3.5 billion from the year-ago period, according to data
provider Dealogic. That was the third-largest decline of any region
globally after the much smaller regions of Latin America and the
Middle East and Africa. It also stood in contrast to the 3%
year-over-year quarterly drop to $10.2 billion in North
America.
Last month, UBS Group AG Chief Executive Sergio Ermotti
described the first three months of 2019 as "one of the worst
first-quarter environments in recent history," prompting the big
Switzerland-based bank to target $300 million in extra cost
savings. Earlier this month, Japan's Nomura Holdings Inc. announced
plans to shrink its operations in Europe because of the "unstable
market environment" it faces, Kentaro Okuda, Nomura's co-chief
operating officer told investors.
Société Générale said it plans to refocus on its equity
derivatives and structured products units, close its
over-the-counter commodities business and stop proprietary trading.
The bank said it would also restructure its rates, credit,
currencies and prime services businesses, along with its asset and
wealth management unit, to make them more profitable.
The job cuts at Société Générale will mainly affect the bank's
global markets and investor services--which includes fixed income
and equity trading and securities services--and employs about
22,000 people world-wide, according to trade unions.
The unit's profit more than halved in the fourth quarter of 2018
amid difficult markets, forcing the bank to cut its profitability
target and raising the pressure on Chief Executive Frédéric Oudéa,
whose 11-year tenure is up for renewal in May.
Société Générale said it expects to complete its restructuring
plan by the end of the third quarter of this year.
Write to Noemie Bisserbe at noemie.bisserbe@wsj.com and Ben
Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
April 09, 2019 10:48 ET (14:48 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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